Monday, October 24, 2005

It's official. President Bush named Ben Bernanke of Princeton University, former Federal Reserve governor and currently chair of the president's Council of Economic advisers, to be the next Fed chair (home page with vita). I don't expect any trouble over confirmation.

Personally, I am pleased with this nomination. Here is one reason I'm encouraged:

Fed Official Moves Up and Into Politics, by Edmund L. Andrews, New York Times: ...Mr. Bernanke built a sterling reputation while at Princeton, and has won widespread praise for his cogent analyses while at the Fed. But he has studiously avoided partisan political issues, at least in public. He has said little about issues at the top of Mr. Bush's agenda, like Social Security and tax cuts, and his economic writing betrays few hints of political ideology. "If you read anything he's written, you can't figure out which political party he's associated with," said Mark L. Gertler, a professor of economics at New York University who has written more than a dozen papers with Mr. Bernanke. Mr. Gertler, who said he did not know his close friend's political affiliation until relatively recently, added: "He's not ideological. I could imagine Ben working with economists in the Clinton administration." Alan S. Blinder, a longtime colleague at Princeton who has advised numerous Democratic presidential candidates, also said he had worked alongside Mr. Bernanke for years without having any sense of his political views. "We wrote articles together and sat at the same lunch table thousands of times before I knew he was a Republican," Mr. Blinder recalled. "We never talked politics." Mr. Bernanke enjoys enormous credibility among economists in academia as well as on Wall Street - an advantage for him that may also pay off for Mr. Bush.

I do not believe Bernanke will politicize the job as much as Greenspan did. My worry is the opposite, that he will not speak forcefully enough on issues such as the budget deficit that impact monetary policy. The credibility he has on Wall Street mentioned in the article is important and I don't imagine this upsetting markets. His credibility in the academic world is at least as strong, another factor working in his favor from my perspective.

Contrary to widespread conjecture President Bush did not appoint his accountant to be the new Chairman of the Federal Reserve. He appointed Ben Bernanke:
WASHINGTON (AP) - President Bush on Monday selected Ben Bernanke, chairman of the president... [Read More]

A number of economist bloggers were asked by the Wall Street Journal for comment on the Bernanke selection. You can read all of our comments at the WSJ Econoblog page. NY Times story here. More to follow. UPDATE: Greg Ip... [Read More]

President Bush has named Ben Bernanke, the current chairman of the White House Council of Economic Advisors, to succeed Alan Greenspan as the head of the Federal Reserve. While Mr Bernanke has differed slightly with Mr Greenspan in favouring more forma... [Read More]

Tracked on Monday, October 24, 2005 at 10:54 PM

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Nomination for Next Fed Chair: Ben Bernanke

It's official. President Bush named Ben Bernanke of Princeton University, former Federal Reserve governor and currently chair of the president's Council of Economic advisers, to be the next Fed chair (home page with vita). I don't expect any trouble over confirmation.

Personally, I am pleased with this nomination. Here is one reason I'm encouraged:

Fed Official Moves Up and Into Politics, by Edmund L. Andrews, New York Times: ...Mr. Bernanke built a sterling reputation while at Princeton, and has won widespread praise for his cogent analyses while at the Fed. But he has studiously avoided partisan political issues, at least in public. He has said little about issues at the top of Mr. Bush's agenda, like Social Security and tax cuts, and his economic writing betrays few hints of political ideology. "If you read anything he's written, you can't figure out which political party he's associated with," said Mark L. Gertler, a professor of economics at New York University who has written more than a dozen papers with Mr. Bernanke. Mr. Gertler, who said he did not know his close friend's political affiliation until relatively recently, added: "He's not ideological. I could imagine Ben working with economists in the Clinton administration." Alan S. Blinder, a longtime colleague at Princeton who has advised numerous Democratic presidential candidates, also said he had worked alongside Mr. Bernanke for years without having any sense of his political views. "We wrote articles together and sat at the same lunch table thousands of times before I knew he was a Republican," Mr. Blinder recalled. "We never talked politics." Mr. Bernanke enjoys enormous credibility among economists in academia as well as on Wall Street - an advantage for him that may also pay off for Mr. Bush.

I do not believe Bernanke will politicize the job as much as Greenspan did. My worry is the opposite, that he will not speak forcefully enough on issues such as the budget deficit that impact monetary policy. The credibility he has on Wall Street mentioned in the article is important and I don't imagine this upsetting markets. His credibility in the academic world is at least as strong, another factor working in his favor from my perspective.